On the Measurement of Unemployment in the Developing and Developed Countries

The nature of unemployment is not the same in developing and developed countries. A large proportion of population in the developing countries lives in the rural sector where the agriculture and agriculture based activities are the main sources of livelihood. The work activities in agriculture are quite irregular and sporadic, leading to frequent entry and involuntary withdrawals from the labor force on the part of laborers. The intensity of unemployment or underutilization of labor is likely to vary with the agricultural and related seasonal activities, rainfalls and natural calamities. In contrast, a large proportion of the populations in the developed (rich) countries live in urban areas where most work activities are regular. However, given the technological innovations, the developed nations are characterized by the phenomenon of job construction and destruction leading to frictional unemployment. Since developed economies are also prone to business cycles, the level of unemployment fluctuates over the business cycles, leading to the problem of longer unemployment durations. Thus, the nature of unemployment in developed countries is different from that in the developing countries. A single analytical framework for measuring unemployment is unlikely to capture the unemployment situations in the developed and developing countries. This paper surveys the existing literature and presents separate analytical frameworks for measuring unemployment in developing and developed countries.